A Tale of Two Audits: Numerous Government IT Problems in Australia and Scotland

For the past several years I have covered the on-going payroll system problems at Australia’s Queensland Health Service which saw an estimated A$6.19 million (fixed price) IT project morph into one that will likely end up costing over A$530 million to get right. The debacle, which helped spur the defeat of Queensland’s long-ruling Labor government earlier this year, also unsurprisingly prompted an audit of Queensland’s governmental IT projects by the incoming LNP-led government.

In a story in the Brisbane Times, Bates compared the state of Queensland’s government IT to a “1972 Ford Falcon” clunker, in terms of the need for daily repair. However, many of its obsolete legacy systems are mission critical, and could “melt down” at any time with disastrous effects. The audit report estimates that getting Queensland's IT back up to acceptable standards will cost at least A$3.6 billion and as much as A$6 billion. The challenge is going to be how to reach an agreeable level of acceptable IT risk since the government, already facing a nearly A$100 billion deficit, “cannot afford” the sums identified by the audit.

Bates says that as part of its efforts to solve the IT mess the government will “be going out to the market and looking for solutions from the market.” Well, she may want to first read Auditor General for Scotland Caroline Gardner’saudit (pdf), published last week. It found “significant weaknesses” in three major IT government projects that involved major IT systems upgrades (and market solutions) totaling some £130 million; each had business cases the audit termed, with typical UK understatement, of “variable quality.”

According to the audit and the UKPA story, a £10 million project to improve COPFS case management was originally slated to start in August 2009 and to be completed by June 2011. However, warnings arose soon after the business case was approved that the project was much more complicated than estimated and therefore would cost significantly more than budgeted. So after spending £2.3 million but before anything of substance was created, the project was terminated, and all the costs written off.

The audit also reported that in 2004 the Registers of Scotland signed a ten year, £66 million agreement with telecom company BT to maintain and update its IT systems. However, for six years there was no formal peer review of the project's overall status. Now, with the contract's cost reaching £112 million (including having to write off two projects at a cost of £6.7 million) due in part to incorrect strategic assumptions in the original business case and subsequent poor contract management and oversight, the government has belatedly decided to terminate the contract 20 months early. How much the government will pay BT for early contract termination is still under negotiation.

In Disclosure Scotland’s case, its IT project was supposed to cost £31 million, running from June 2009 to May 2011. However, when it went live in February 2011, the “system experienced significant problems and did not perform as required,” meaning the old system had to be kept in operation. One reason for the difficulties was traced back to the business case which did not make it clear who in government was in charge of the program; the IT supplier viewed its client as being the government of Scotland, because that's who signed the contract, not Disclosure Scotland’s management team. This in turn helped create “different views of risks and [the] priorities” for managing them, which eventually led to system development issues. The project has cost £19 million so far, as payments to the supplier have been held up until the system is put right, which is planned to be by the end of this year. The legacy system it is meant to replace is expected to be finally shut down next year.

A story in the BBC summarized the findings of the Scottish IT audit in this way, saying that it found “ ‘weaknesses in financial control and progress reporting,’ claimed that ‘risk management was inadequate’ and the findings of independent reviews were ‘not always acted on.’ ”

All of which should serve as a warning to the government of Queensland as it tries to sort out its own IT messes.